The UK Services PMI Business Activity Index fell to 50.5 in March from 53.9 in February, marking its lowest level since April 2025 and below the earlier estimate of 51.2. While the reading remains above 50, indicating expansion, growth was only marginal and the weakest in 11 months.

The slowdown was mainly driven by falling business and consumer spending, with firms citing concerns over the impact of the Middle East conflict. New orders declined for the first time since November 2025, with the sharpest drop in eight months. Export demand also weakened, with overseas orders falling at the fastest pace since April 2025.

Cost pressures increased sharply during the month, with input price inflation rising to its highest level since April 2025. Around 40% of firms reported higher costs, mainly due to rising fuel, transportation, wages, and raw material prices. Companies responded by raising selling prices at the fastest rate in 11 months.

Backlogs remained broadly stable, indicating sufficient capacity, while employment declined again, though at the slowest pace since October 2025, as firms managed rising costs.

Business confidence also weakened, falling from January's 15-month high to the lowest level since June 2025, amid concerns about inflation, supply chains, and the broader economic outlook.

The UK Composite PMI Output Index fell to 50.3 from 53.7, signalling only marginal overall growth, with services slowing and manufacturing output declining.

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